Thursday, September 1, 2016

In Natural Disasters, Companies Operate Like Neighbors

Just as Wal-Mart rushed to help during Hurricane Katrina, oil firms leaped into action when wildfires swept Alberta, Canada.

By Steven Horwitz, writing for the WSJ. Mr. Horwitz is an economics professor at St. Lawrence University in Canton, N.Y. Excerpts:
"For much of May, a huge forest fire devastated the town of Fort McMurray and more than a million acres of land in the Canadian province of Alberta. It chased more than 60,000 people from their homes and destroyed large parts of the city. Horrific videos show people escaping through walls of flame.

Most accounts of the disaster didn’t note the role of local energy companies in facilitating those escapes and sheltering refugees. When the situation got out of control, the oil firms at the northern end of the fires threw out their security protocols and opened their doors.

Tristin Hopper of the National Post gathered the figures: The oil companies provided free food and shelter to over 25,000 people. When the fires cut off easy road access to the small community of Fort McKay First Nation, Brion Energy began trucking in perishable foods daily. Imperial Oil IMO -0.03 % donated 20,000 liters of gasoline to the relief efforts and Shell Albian Aerodrome rounded up evacuees on buses and, along with Suncor’s Firebag Aerodrome, evacuated over 7,000 people on company-chartered commercial jets using their private airstrips. “Alberta’s oil producers,” Mr. Hopper wrote, “effectively turned themselves into multimillion-dollar humanitarian organizations at the drop of a hat.”

That shouldn’t surprise anyone who knows what Wal-Mart WMT 0.92 % did after Hurricane Katrina hit the Gulf Coast in 2005. The company shipped thousands of trucks of water and other supplies into the area, well ahead of the lethargic Federal Emergency Management Agency. It even beat the Red Cross in many areas. The firm reopened most of its stores within 10 days. Wal-Mart also guaranteed employment at other stores for any of its workers who were forced to abandon their homes and jobs along the coast.

Wal-Mart’s response received praise from numerous local officials. The mayor of the New Orleans suburb of Kenner said that the company had prevented his community from completely collapsing: “The only lifeline in Kenner was the Wal-Mart stores. We didn’t have looting on a mass scale because Wal-Mart showed up with food and water so our people could survive.”

It wasn’t the only company that pitched in: Marriott provided its displaced workers with cash, rooms and food at hotels in other cities. McDonald’s MCD -0.38 % gave free food to first responders and told its emergency management vice president that he could assume an unlimited budget for tracking down employees and making sure they were safe. Other smaller disasters since Katrina tell similar stories.

There are two things to be learned from this consistent pattern of virtuous behavior. First, these firms have experience that makes them distinctly effective during and after disasters. Wal-Mart constantly responds to changing market conditions, moving people and resources where they are needed. FEMA and other agencies don’t regularly engage in this sort of behavior. Communities would be wise to work closely with the private sector on disaster-relief protocols.

Second, we too easily forget that these firms are part of their communities. The people who work for Wal-Mart in New Orleans or for Imperial Oil in Fort McMurray have every reason to want to see their fellow citizens treated well. The peaceful exchanges that make up the free market are built on mutual benefit.

As companies engage in peaceful commerce with their friends and neighbors, they begin to inculcate what the economist Deirdre McCloskey calls the “bourgeois virtues,” which go vividly on display when disaster strikes. Many Albertans, as they return to their homes now that the fires have subsided, are glad today that they lived near those supposedly evil oil companies."

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